Rockwell Diamonds Inc. Receives Ruling That Pala Offer in Breach of South African Securities Legislationadmin
Rockwell Diamonds Inc. announced today that the Executive Director of the South African Securities Regulation Panel (“the SRP”) in response to objections lodged by Rockwell issued a ruling on October 14, 2008 with respect to the unsolicited offer by Pala Investments Holdings Ltd (“Pala”) to acquire all of the outstanding shares of Rockwell for $0.36 per share (“the Offer”).
The Executive Director has ruled that the Offer is in breach of certain of the provisions of the Securities Regulation Code on Takeovers and Mergers and the Rules of the Securities Regulation Panel of South Africa (collectively, “the SRP Code”) and has ordered Pala to amend the Offer.
The guiding principle of the SRP Code is to ensure the fair and equal treatment of all security holders. The Executive Director has ruled that the Offer fails to properly consider the rights of option holders and warrant holders and ruled that appropriate offers must be made to the holders of outstanding Rockwell warrants and Rockwell options pursuant to Rule 12 of the SRP Code in instances where the warrants or options have a positive monetary value.
The Executive Director also ruled that the Offer fails to comply with the SRP Code because it is subject to several conditions which depend solely on the subjective judgment of Pala. Accordingly, Pala is obliged to issue a supplemental offer circular in which it amends the conditions set out in paragraphs 4(c), 4(l) and 4(o) of Pala’s takeover bid circular by removing the elements of those conditions that are within Pala’s subjective discretion to determine fulfilment.
The Executive Director specifically noted that he did not receive a copy of the Offer document until the day it was filed and that the Panel had not given its approval of the Offer document.
“Pala’s failure to comply with certain of the requirements of the SRP Code is consistent with its opportunistic conduct in making the Offer,” said John Bristow, President, Chief Executive Officer and director of Rockwell. “Pala has sought to circumvent the principles of fair and equal treatment of all security holders reflected in the SRP Code. In addition to undervaluing the Company and seeking to deprive security holders of the opportunity to share in the Company’s significant upside potential, Pala seeks to intentionally deprive security holders of the rights afforded to them under the SRP Code. Our Special Committee and Board of Directors reiterate their unanimous recommendation that the Offer is inadequate and unfair, and shareholders should REJECT the Offer and NOT TENDER their shares.”
The directors of Rockwell accept responsibility for the information contained in this announcement and confirm that to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and, where appropriate, does not omit anything likely to affect the import of such information.